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1. Is buying home right for you?
Remember that buying a home is one of the biggest emotional and financial
decisions you'll ever make, so prepare yourself to make a knowledgeable
decision.
When most of us consider becoming homeowners, we immediately think of how
wonderful it will be. It is true that there are a lot of good reasons for
wanting to buy a home. Here are some of the main advantages of owning a
home:
- Financial Security. If housing prices rise, your home can provide you
with some financial security due to capital appreciation.
- Flexibility. You can decorate or renovate your home to meet your own family's
personal tastes and needs.
- Stability. Having a place of your own
Also there is some disadvantage of owning a home:
- Financial Stress. Coming up with the down payment, meeting regular mortgage
payments and other ongoing costs will tie up a lot of your cash, and can
put considerable stress on your finances.
- Maintenance. Keeping your home in good shape requires time and money.
- Higher Costs. You may pay more each month for housing than you did as
a renter. There are also extra costs for maintenance and property taxes.
More Responsibility. You alone are responsible for payments, repairs and
maintenance.
2. Apply for Pre-approval Mortgage
It is a good idea to meet with your mortgage broker, or a loans officer
before going house-hunting. The mortgage broker will calculate the price
range of properties you can consider. The application will also give you
an interest rate guarantee to protect you against increases in mortgage
rates for 60 to 120 days.
At the end of this meeting you are then able to tell your Realtor that you
are 'pre-approved' for (or have a 'pre-arranged' mortgage for; or you are
'pre-qualified' for) a mortgage for 'X dollars'. Most realtors are then
willing to spend more time with you as they then know that you are a serious,
qualified purchaser.
Your mortgage broker will calculate the amount of the mortgage for which
you qualify. Together with your downpayment, you will then have an accurate
idea as to the maximum amount that you can spend on a house.
Even though YOU have been pre-approved for a mortgage you should still have
a 'subject to financing' clause in your Contract of Purchase and Sale. The
value of the property you wish to buy is part of the final approval process,
and an appraisal may be necessary. Mortgage applications may be declined
because lending institutions are not willing to mortgage properties, even
though the applicants are well-qualified.
3. Find out the associated cost of buying home
The following is a list of the most common costs, with an indication of
prices. Costs vary greatly across the country, so check with your real estate
agent to learn what the costs will be in the area where you are intending
to purchase.
To avoid any surprises on closing, a good rule of thumb is to set aside
an amount equal to 1.5% of the purchase price to cover expenses like these:
Up front Cost:
- Deposit: ~ $0 to $ thousands
- Down Payment. $0 to
$ thousands
- Appraisal Fee. $200
- $350
The appraiser will consider the size of the property (both land and buildings),
the location of the property and the condition of the main house to determine
a 'replacement value'. She or he will then compare the property with a few
recent sales of similar properties in the same area.
The appraiser will arrive at a dollar figure that, in his or her professional
opinion is a fair market value for the property. It is not unusual for the
value to be the same as the purchase price of the property.
If the appraised value is higher than your purchase price, you know you
have made a good buy.
Problems can occur if the appraised value is lower than the purchase price
and you are making the minimum possible downpayment. In most cases, the
lending institution is obligated to lend mortgage money based on the lower
of the purchase price or the appraised value.
When the appraisal is below your purchase price, you have 4 choices:
- renegotiate your purchase price,
- collapse the deal,
- come up with the difference between the appraised value and the purchase
price
- over and above the equity you already have, or
- pay for another appraisal to be done by another firm. Sometimes different
firms will arrive at different prices, but this is a gamble.
There are occasions when you may be willing to pay higher than the appraised
value - for example, when there is more than one offer at the same time,
the vendor will choose the 'best' offer. Or perhaps this is the house of
your dreams and you are willing to pay extra to buy it.
- Home Inspection Fee.
~ $250 - $350
- GST (Goods & Services
Tax). $0 to $ thousands
GST is NOT charged on the purchase price when you are buying a previously
occupied residence. This includes a house, apartment, vacation property
or non-commercial hobby farm.
GST IS charged when you are buying (or building) a newly constructed residence
(house, apartment etc.). The entire amount including land value is subject
to the tax. If the residence is to be owner-occupied then you may qualify
for a GST rebate of approximately 36% of the GST charged, depending upon
the completed value of the property. GST is sometimes charged on the purchase
of a lot.
Check with your lawyer to learn the current rules regarding 'new construction
and the GST'.
- Property Insurance.
~ $50 - $100
- Land Transfer Tax. $0
to $ thousands
- Mortgage broker fee.
$0 to $ thousands
The fees paid by the lending institutions are very similar, so the main
reason for your broker to place your mortgage with one lender over another
is to get you a better rate or a better product.
Ask your broker to show you the different mortgage interest rates and explain
why she or he thinks the product offered by one institution is better than
another.
- Mortgage Loan Insurance.
~ $0 to $ thousands
- Property Tax Adjustment.
~ $0 to $ thousands
Property taxes are calculated for the calendar year (January to December).
In some municipalities these are paid once a year - in early July. In other
areas, such as Vancouver, they are paid twice a year - January and July.
In some parts of the country, taxes are collected quarterly or even monthly!
Your lawyer will find out how much the property taxes are for the new residence
and will calculate how much the vendor owes and how much the purchaser will
owe. This depends upon the adjustment date on the purchase agreement.
| For example: |
. You are buying in Toronto
. your taxes are $1,825 per year
. taxes are due July 4th
. your adjustment date is September 30th
Your lawyer will divide $1,825 by 365 (days in the year) then multiply
by the remaining number of days in the year, in this case 92 days.
$1,825 / 365 x 92 = $460
In this case you will owe the vendor $460.00
In some cases the vendor will owe you money! |
- Survey or Certificate.
~ $0 - $2000
- Estoppel Certificate
Fee. ~ $ 100
- Title Insurance. ~
$ 200
- Utility Adjustment.
$0 to $ thousands
- Legal Fees and Disbursements.
~ $500 - $2,500
Up front Cost:
- Moving Cost. ~ $200
to $ thousands
- Utility Connection.
~ $150 to $ 200
- Appliances. ~ $ 0 to
$ thousands
- Gardening equipment.
$ 0 to $ thousands
4. What should you buy?
There are many types of homes to choose from and each has its advantages
and disadvantages. Think about your needs before making a decision. Don't
forget to look beyond the walls. The environment surrounding your home can
be almost as important as the environment inside of it.
Single-family Detached:
The most popular style and the most solid investment. It is a free-standing
home which sits on its own lot thereby offering a greater degree of privacy.
Semi-detached:
A single-family home that is joined to another one by a common wall. It
can offer many of the advantages of a single-family detached home and is
usually less expensive to buy and maintain.
Duplex:
Two units - one above the other or side by side. The owner usually lives
in one unit and rents the other.
Row House or Townhouse:
One of several types of single-family homes joined by common walls. It offers
less privacy than a single-family detached home but still provides a separate
outdoor space. These homes can cost less to buy and maintain.
Link or Carriage Home:
Houses joined by garages or carports which provide access to the front and
back yards. Builders sometimes join basement walls so that link houses appear
to be single-family homes on small lots. These houses can be less expensive
than single-family detached homes.
Manufactured Home:
A factory-built single-family home that is transported to your chosen location
and placed on a surface-mounted foundation. The term manufactured home has
replaced the term "mobile home".
Modular Home: Also a factory-built home constructed in compliance with local
building codes. The home is typically shipped to your location in two or
more sections. It may or may not have a longitudinal sub-frame.
Condominium: Refers to a form of legal ownership as opposed to a style of
construction. Condominiums can be high-rise residential buildings, townhouse
complexes, individual houses and low-rise residential buildings.
Before you start searching for a home, you need to think about your needs
both now and in the future. Here are some things to consider:
Size requirements. Do you need several bedrooms, more than one bathroom,
space for a home office, a two-car garage?
Special features. Do you want air conditioning, storage or hobby space,
a fireplace, a swimming pool? Do you have family members with special needs?
Lifestyles and stages. Do you plan to have children? Do you have teenagers
who will be moving away soon? Are you close to retirement?
Even if the home you choose has everything you need, the location might
not be appropriate. When deciding where to live, you should take the following
things into consideration:
Whether you want to live in a city, a town or even in an out-of-town location
Where you work and how easy it is to commute
Where your children will attend school and how they will get there
Whether you need a safe walking area or recreational facilities such as
a park nearby
How close you would like to be to family and friends
5. Choose your team
- The real estate salesperson
The Realtor can make appointments for you to see the homes that interest
you. Realtors are aware of current market conditions and what prices are
realistic. They assist in making an Offer to Purchase, and can advise you
regarding what conditions you should include in any offers.
The main role of a mortgage broker is to find the lending institution with
the best rates and terms to suit your needs. Due to the volume of mortgage
dollars that brokers process they are able to obtain discounts on most mortgage
rates.
Mortgage brokers work flexible hours and can usually arrange an appointment
at a time to suit you. Most will meet you in your home or at a location
convenient to you. Most important of all - they specialize in mortgages
and keep up with changes in real estate law and in the many products offered
by the lending institutions.
It is always a good idea to pay for a building inspection on any house you
are considering purchasing. You are paying many thousands of dollars for
a house, why not spend a couple of hundred dollars first to ensure the property
is sound.
An professional inspector will provide a detailed written report on the
present condition of the building and indicate whether any repairs are necessary
and their approximate cost. Your Realtor can usually help you find a good
inspector.
Your lawyer ensures that your legal interests are protected when you buy
a property. Your lawyer will review any contracts involved in buying, such
as the Offer to Purchase and the mortgage document, your lawyer will be
responsible for many of the closing arrangements.
An insurance broker can provide you with the necessary insurance, including
house insurance and mortgage life insurance.
6. Search for home
When you know your price range, put together a list of your other needs
and wants.
For example:
Do you have to be close to schools, public transportation, or shops?
How many bedrooms and bathrooms do you need?
What style of property do you want (e.g. 1950's, or new)?
Do you enjoy or hate gardening? Do you need a yard for pets?
Do you need medical facilities in the immediate area?
Do you want a workshop area?
Do you want a garage?
Make your wish list as long as you like and a Realtor can assist you in
finding that 'special property' that is right for you.
Realtors have access to a wide range of available properties and can book
and appointment to visit different property and advise you of the current
sale prices of comparable houses. They hear about new listings and price
reductions before they get listed or advertised. Realtors will arrange appointments
for you to view homes and find out for you what items are included in the
sale price.
Once you have selected that 'special property' you wish to purchase, the
Realtor will help you negotiate with the vendor (home owner).
7. Make an offer to purchase property
Once you have selected that 'special property' you wish to purchase, the
Realtor will help you negotiate with the vendor.
Your offer (purchase agreement) should include:
- a description of the property
- civic address and legal description
- the price you are offering to pay
- the amount of your initial deposit, and when it is to be paid. The deposit
is part of your down payment and is to indicate your 'good faith' when signing
the contract. . the date you wish to pay for the property (the 'completion
date' or 'closing date')
- the date you wish to move into it (the 'possession date') the date the
buyer assumes responsibility for property taxes, rates, utilities etc...
(the 'adjustment date')
what your offer includes in the price (e.g. appliances)
You will need to present a deposit along with your offer. An appropriate
deposit will show your good faith to the seller. The seller's agent is bound
by law to bring all offers to the seller's attention.
Some common types of conditions are:
- getting a suitable mortgage (include the amount, interest rates and any
other figures you feel important);
- selling your current home (the seller may continue to look for a buyer,
but will give you the right of first refusal);
- the seller providing a current survey, or a "real property report," showing
the location of the house on the property owned by the seller and that there
are no encroachments;
- the seller having title to the property (your lawyer will check this out
when he or she conducts a title search to see if there are any liens on
the property, easements, rights of way or height restrictions);
- if there is a septic system, the seller should have a health inspection
certificate, stating the system meets local standards;
- if you still have any doubts about the home's safety and construction,
you may wish to make the purchase conditional on an inspection by a qualified
engineer;
- any inclusions - basically, what stays and what goes.
The vendor might choose to accept your offer as is, or the vendor might
make a counter offer on one or more points. It is also possible that the
vendor may decline your offer completely.
If the vendor counters your offer (e.g. the vendor wants a higher price
for the property), a time limit will be imposed on you. At this point you
can accept the changes to the contract or walk away from negotiations. An
experienced and 'cool-headed' Realtor is invaluable at this stage as emotions
are often running high.
Sometimes vendors may add their conditions to a sale - such as 'subject
to confirmation the purchaser can complete the purchase of...(property)
by...(date)'.
Once both purchaser and vendor agree to all terms and conditions and the
Contract of Purchase and Sale has been signed, dated, and witnessed, you
have an accepted offer and are in a binding contract, subject only to the
conditions being satisfied.
8. Complete the deal
Once you have an accepted offer on the property you wish to buy, you will
need to give some information to your mortgage broker. Either you (or your
Realtor) will provide a copy of the Purchase Agreement to your mortgage
broker. It would also help if you could provide a copy of the listing, showing
the legal description, property taxes, tax roll number, lot size, and zoning.
The broker will ensure all the necessary documents, such as employment verification
and proof of down payment have been provided. The mortgage broker and purchaser
will then confirm the following - the exact mortgage amount, the interest
rate, the term, the payment frequency.
Mortgage broker may need to order an appraisal and survey. This can take
from a few hours to a few days, depending on location and how busy the market
is.
Meanwhile, the Realtor will be overseeing any other conditions that need
to be satisfied. For example, a building inspection may be required and
the Realtor will arrange for the inspector to view the property.
What if the building inspector locates a problem? Your Realtor will discuss
the next step with you. There are various solutions, depending on the problem.
You could decide that the problem is minor and accept the property as is.
You could try to negotiate a reduction in purchase price.
The vendors could fix the problem to your satisfaction.
You could refuse to remove the 'subject to...' and walk away from the deal.
9. Remove the subjects
Once all conditions have been satisfied, your Realtor will meet with you
to sign another form to remove 'the subjects'. You now have a binding contract
and non-completion can result in serious legal consequences.
10. Go to lawyer's office
- Statement of adjustment
Your lawyer will then do the appropriate searches to determine what charges
are listed against the property (e.g. the vendors mortgage). These must
be satisfied by the vendor before title can be transferred to you.
Approximately one week before your closing date, you meet with your lawyer.
He or she will explain the mortgage documents to you and witness you signing
them. Your lawyer will request a copy of your fire insurance on the new
property, with loss payable to the lender.
Your lawyer will explain the statement of adjustments and disbursements.
This statement lists the various expenditures and where the money is coming
from to pay for them.
For example:
- The contract amount of the purchase
- Less the amount of deposit you gave the Realtor
Less the amount of your mortgage forwarded by the lending institution to
your lawyer
Add the amount of the down payment you still owe
Add the portion of property taxes you owe the vendor OR
Subtract the portion of property taxes that the vendor owes to you
Add or subtract any other adjustments that are required (e.g. land or property
transfer tax)
Add the lawyer's fees
The balance is the amount that you will have to pay to the lawyer 'in trust'
to complete the transaction. Most lawyers will require a bank draft or certified
cheque.
On the completion date your lawyer will forward the total amount required
to the vendor's lawyer 'in trust' on the vendor's lawyer's undertaking to
provide clear title to you.
Once the vendor's lawyer has received the money, your Realtor will be given
the go-ahead to hand you the keys.
Congratulations on completing the purchase of your new house!
11. Moving day
With moving day fast approaching you want to make sure that your furniture
is not the only thing to follow you to your new home. By contacting the
ministry you can easily update your personal information to reflect your
new address. Here you'll find all the contact numbers you need for that
smooth transition.
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Ministry
Information
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Queen’s Park 900 Bay Street, Toronto (Bay Street and Wellesley Avenue)
Located in Building Lobby
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Open 24 Hours |
1-888-454-6757 |
| Ministry of Transportation |
137 Yong St., Suite 110 Toronto, ON M5C 1W6
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Mon – Wed, & Fri: 9 to
5; Thurs: 9 to 6 Sat: 9 to 1 |
416-362-3312 |
| Ministry of Health |
47 Sheppard Avenue East, Suite 417
3 pieces of identification are required demonstrating:
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Mon Tues Thur & Fri:
8:30 am to 5:30 pm |
416-314-5518 |
Change of address for your (1) driver’s
license, (2) vehicle registration and (3) OHIP may be all done at
a kiosk
Note: This website allows you to change your address for Driver's
Licence http://www.mto.gov.on.ca/english/dandv/driver/change.htm |
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Utilities
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| Consumers Gas |
Telephone: (416) 492-5100 or 1-888-492-5100
Email: customercare@cgc.enbridge.com
Web Site: http://www.cgc.enbridge.com
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| Toronto Hydro |
Telephone: (416) 542-8000
Email: contactus@torontohydro.com
Web Site: http://www.torontohydro.com
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| Rogers Cable |
Telephone: 1-888-764-3771
Email: cabletv@rci.rogers.com
Web Site: http://www.shoprogers.com
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| Bell Canada |
Telephone: (416) 310-BELL (2355)
Email: http://www.bell.ca/webtrust/secureforms/en/contact/email/
Online Form: https://www.bell.ca/webtrust/secureforms/en/care/connect/move.asp
Web Site: http://www.bell.ca
Internet Service www.sympatico.ca
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| Note: A minimum charge to transfer
your telephone service is $55.00 (plus tax). If jack work is required,
additional charges will apply. |
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Other Tips
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| Canada Post |
Moving? Don’t know what to do about your mail?
Just visit www.canadapost.ca and see what your options are for changing
your address on-line and redirecting your mail delivery! Or... Just
visit your local Post Office at least two weeks before your move date
and fill out a Change of Address Notification Form. For only $33.00,
Canada Post will forward your addressed mail to your new home, within
Canada, for six months.
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| Utilities |
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Hydro |
Water |
Gas |
Bell Canada |
| Mississauga |
905-273-9050 |
905-791-8711 |
905-276-3400 |
905-310-BELL |
| Oakville |
905-825-9400 |
905-825-9400 |
905-335-7353 |
905-310-BELL |
| Brampton |
905-840-6300 |
905-791-8711 |
905-276-3400 |
905-310-BELL |
| Toronto |
416-394-3500 |
416-314-0780 |
416-492-5100 |
905-310-BELL |
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11. Maintenance & Repair
Good maintenance on a regular basis is a crucial part of keeping your home
in top condition, both for your enjoyment and for the future resale value
of your house. If you do not care to or feel capable of performing these
tasks yourself, you may want to hire a qualified person to help you.
While most maintenance is seasonal, there are some things you should do
on a frequent basis year round: Make sure intake, exhaust and forced air
vents indoors and outside are not blocked. Check and clean range hood filters
on a monthly basis. Test the ground fault circuit interrupter(s) on electrical
plug-ins monthly by pushing the test button, which should then cause the
reset button to pop up. If there are young children in the house, make sure
electrical outlets are equipped with safety plugs. Regularly check the house
for safety hazards such as a loose handrail, lifting or buckling carpet,
etc.
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Thinking of Buying or Selling ???
Call Today and Start Paking !!!
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Kambiz Farsian
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Sales Representative
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Direct:
416-317-4438
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RE/MAX
Professionals Inc.
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